Unexpected and high-cost medical bills from out-of-network hospitals and physicians are contributing to the growing problem of consumer medical debt, and in New York, it is causing some to go broke, according to a report from the New York State Department of Financial Services (pdf).

The DFS surveyed 11 different health insurers and HMOs about their policies and procedures for surprise medical bills, coverage of out-of-network services and excessive charges for emergency services. Surprise medical bills are bills sent to patients from out-of-network providers, but the patient did not know they were out-of-network. For example, one New York patient went to an in-network hospital for gallbladder surgery with an in-network surgeon, but the patient was not informed an out-of-network anesthesiologist would be used, resulting in a $1,800 bill.

The DFS also reviewed more than 2,000 complaints it received last year involving payment issues, many of which involved patients who received surprise bills after scheduled, non-emergency procedures that were approved by their health insurer.

On average, 50 percent of the large bills reported by health insurers and HMOs were associated with orthopedic surgery, neurosurgery and plastic surgery. One health insurer reported 95 percent of the large bills it received from out-of-network providers for emergency services were for those three specialties.

Neurosurgery bills, in particular, had the highest dollar gap difference. The average neurosurgery bill was $22,159, but health insurers generally only paid an average of $8,276 — a difference of $13,883, according to the report.

Emergency bills were also "excessively" high. DFS investigators found the average emergency out-of-network bill in their reviewed cases was $7,006 — 14 times what Medicare would pay. A specific case found a neurosurgeon charged $159,000 for an emergency procedure when Medicare would have paid $8,500, according to the report.

The DFS proposed four main solutions to curb unexpected and high out-of-network medical bills: increase disclosure from hospitals and physicians on what services are in-network and what services are out-of-network; increase disclosure from health insurers, especially noting whether it uses a "usual and customary rate" or the Medicare rate; prohibit excessive fees for emergency services; and improve insurance network protections.